Enjoy A Debt-Free Life

We all know that it's easier to spend money than it is to earn it, and this little formula has gotten everyone into trouble at some time or other.

Maybe you figured you could postpone paying the heating bill for a couple of months, or took out another credit card to pay for that long weekend golf trip, and now so many collection agencies are after you that you're scared of the mailbox. Or perhaps your student loan or mortgage has proven more difficult to pay off than you originally anticipated, and now shaking off that debt seems hopeless. What's to be done?

Declaring bankruptcy is one option, but that might do irreparable damage to your credit rating. But before delving into such desperate measures, perhaps you should consider an alternate means, like seeking out the assistance of a debt consolidation agency. If getting your debts under control seems like an overwhelming task for just one man, it might just be time to call in the professionals.

loan based programs?

There are a number of agencies out there whose sole function is to help take some of the weight off the shoulders of the debt-saddled. Oftentimes founded as community service organizations, these debt consolidation companies can help slash your interest rates and transform an avalanche of bills into a single monthly payment, frequently providing their services for little or no charge.

Consolidation programs generally fall under one of two categories, those that are loan based and those that aren't. Loan based programs provide the debtor with a single loan with which to pay off all of their outstanding dues, leaving them with just one debt. Rather than having to make regular payments to an assortment of creditors, the debtor is left with a single monthly payment — to the agency that provided the loan. Once that balance has been paid off, the debtor can consider himself debt-free.

This first approach to debt repayment carries its own benefits, as well as its own drawbacks. A loan-based program assures the debtor that his debts, with the exception of that one now due to the loan provider, have all been cleared up. Rather than having to deal with a slew of creditors, the debtor is only obliged to one. The obvious drawback to this brand of repayment is that it essentially involves solving the problem with the very means that caused it.

If taking out loans and using credit was what put you in the hole to begin with, taking out another loan might not be the ideal way to get out of it. Another thing to keep in mind is that, although you will no longer be charged interest and late payment fees by multiple creditors, you will be at the mercy of whatever rates the agency that provided the loan dictates.